Trade Name Infringement: The Complete Legal Guide
Trade name infringement is not something to be taken lightly. A name, and even the taglines associated with it, is more than just a name. Along with the name comes your company’s identity, goodwill, profitability, and even the values that you represent. It takes years, or even decades, to build a solid reputation around your brand and make it memorable to customers. When other people or companies use a name that you have built, it can cost your business and reputation.
In this guide, you will learn more about trade name infringement and its various forms, as well as advice on how to protect your rights in the trade name.
Trade Name and Trade Name Infringement
To understand what trade name infringement truly means for you and your company, we need to first understand the term “trade name”.
What is a trade name?
A trademark is any “word, phrase, symbol, design,” or a combination of these, that distinguishes your goods and services from those that come from other companies. Nike’s “swoosh” emblem and McDonald’s golden “M” arches with a red background are examples of trademarks. In contrast, the official name that a sole proprietorship or a company uses to do business is called a trade name, or a “doing business as” (DBA) name. The trade name may even be different from the company’s actual business name. While trademarks relate to the goods or services, a trade name relates to the business itself and its goodwill or reputation, as distinguished in Ball v. Broadway Bazaar, 194 N.Y. 429 (N.Y. 1909). Differentiating goods and services by their trade names not only protects businesses, but it also empowers consumers to choose where to spend their money.
Importantly, not all trade names may be registered as trademarks. In most situations, they may only be registered or considered as such if it relates to a specific product or service and not to the company name alone.
What is trade name infringement?
Imagine that a clothing company decided to create low-quality t-shirts with Taylor Swift’s famous song line, “this sick beat”, without her collaboration or knowledge. When another person or entity uses a name that is identical to yours in such a way that causes confusion or unfair competition and in doing so causes injury to your business, it is most likely a case of trade name infringement. There are, of course, exceptions to the general rule, which includes:
When others use a similar business name, but for a different line of products or services
When trade names use generic terms such as “Acme,” “Anchor,” “National,” “Royal,” “Star,” etc. [American Steel Foundries v. Robertson, 269 U.S. 372, 373 (1926)]
Interestingly, in a 2019 decision involving Booking.com, the U.S. Supreme Court held that even a generic term together with a “.com” may still be eligible for registration as a trademark, if such trademark is clearly associated with a specific entity, and not to an entire class of services. In this case, it was found that consumers widely perceive Booking.com refers to a distinct online travel reservation site, and not to an entire class of such service.
What are the possible consequences of trade name infringement?
Trade name infringement can damage your business in different ways:
It can divert sales, resulting in lost profits.
When a competitor uses a trade name similar to yours to sell a similar product or service, your customers can become confused and buy the product or service from them instead of you. This loss of profits is based on the competitor using your established reputation and customer base to sell their product.It can ruin your reputation.
If a competitor infringes your trade name to sell an inferior product or service or even commit fraud, this can cause harm to what customers assume about the quality of your product or services. Inferior quality can reduce brand loyalty and turn potential customers off of your brand, despite your quality of goods and services. It may even subject you to unnecessary and expensive lawsuits from customers who are unhappy with the competitor’s product/service.It can weaken or “dilute” your brand’s unique identity.
Dilution occurs when the use of a trademark or trade name becomes so widespread that it is no longer unique enough to be associated with your business. In turn, your trade name will no longer be recognized and potential customers will not seek out your product or service.
Ensuring Protection for a Trade Name
The most effective way to protect your trade name is by registering it as a trademark. It can be registered if it is distinctive enough from existing businesses, and specifically identifies your product or service. You can do this through:
Your state trademark office
The United States Patent and Trademark Office (USPTO)
Registration at the state level protects your trade name from infringement within the state, while registration with the USPTO provides protection all over the United States. If you are a small local business owner, you may want to check the requirements for registration at your state trademark office, as state trademarks are usually cheaper, faster, and easier to get than federal trademarks.
If you wish to transfer your trademark ownership rights, it is best to do so with a trademark assignment agreement that helps to legalize the deal.
Available Remedies and Solutions for Trade Name Infringement
Are you experiencing what you believe to be trade name infringement? Even without a trademark or while trade name registration is pending, you still have other ways to protect yourself from trademark infringement:
- Unfair competition laws. When another entity deceptively or misleadingly passes off its goods or services as if it were yours, you have grounds to sue under state and federal laws against unfair competition.
- Lanham Act. Under this trade name law, it is not permissible to misrepresent goods or services to such an extent that is likely to cause confusion. Anyone who believes that such an act is likely to cause damage to their business may sue, provided that there is enough evidence of trade name infringement.
- Common law trademarks. Everyone can protect rights in its trade name if he/she is the first to use it within the area, regardless of subsequent registrations. As long as you continue to use the trade name to identify your business, without any changes, you can enforce ownership over your trade name and even block similar trademark registrations. This is, however, more challenging to enforce, especially on the federal level.
Final Thoughts
Over 20 years ago, recording artist Sade was able to acquire the domain sade.com from the person who originally registered it without her permission, thanks to a World Intellectual Property Organization decision. Despite not having registered “Sade” as a trade name or trademark, she was able to establish that the stage name “Sade,” by itself, represents her brand as a recording artist and performer. Under that name, she sold records, CDs, concert tickets, and more. A trade name represents your reputation, your brand’s recognition, and your service or product that you provide to your customers. As such, it is just as valuable as all of the hard work that you have put into your career or business. If you need advice on how to defend yourself, get in touch with an attorney right away or refer to trade name law.
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